Cost Of Quality QPSP

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Cost Of Quality QPSP

  1. 1. In the Name of Allah Most Gracious, Most Merciful.
  2. 2. CONTENTS 1. Business Environment Quality & Productivity 2. Q. C. D. S. Society of Pakistan 3. What is Cost of Quality (CoQ) 4. Why CoQ 5. How Analyze CoQ 6. DMAIC Approach 7. Changing the Corporate Culture
  3. 3. Please think for a moment……
  4. 4. Can you identify some changes happened at your workplace
  5. 5. Business Environment (Fierce Competition)
  6. 6. Can you name a few organizations, which do not exist any more. Why Organizations Prosper?
  7. 7. The main challenges for the organization? 1. Quality 2. Cost 3. Delivery / Productivity 4. Safety 5. Culture
  8. 8. Cost of Quality
  9. 9. It’s not the tip of the iceberg It’s what you can’t see… that’s the problem…. The Hidden Factory!!!
  10. 10. Primary focus : To reduce Cost of Quality.
  11. 11. WHY ARE QUALITY COSTS IMPORTANT? HARVRD PROFESSOR MICHAEL E. PORTER
  12. 12. WHAT IS COST OF QUALITY? Expenditure in Defect Appraisals activities + COST Losses due to OF Internal & External failure QUALITY + Expenditure in Defect Prevention activities
  13. 13. CATEGORIES OF COST OF QUALITY Cost of Non-conformance Cost of Conformance (Cost of Poor Quality) PREVENTION COST INTERNAL FAILURE COST The cost of any action taken to The costs arising within the investigate, prevent or reduce organization due to non- the risk of a non-conformity conformities or defects APPRAISAL COST EXTERNAL FAILURE COST The costs associated with The costs arising after delivery measuring, checking, or of product or service to the evaluating products or services customer due to non- to assure conformance to conformities or defects quality requirements
  14. 14. EXAMPLE OF QUALITY COSTS PREVENTION COST INTERNAL FAILURE COST - Training cost - Rejection cost -Supplier Training / Evaluations - Rework/Repair cost - Quality Audits cost - Loss due to down grading - Preventive Maintenance cost - Re-testing costs, - SPC implementation cost etc. - quality improvement projects, etc. APPRAISAL COST EXTERNAL FAILURE COST - Inspection & test cost - Warrantee Expenses - Calibration cost - Claims - Laboratory expenses - Returns/Replacements - Equipment cost - Complaints handling, etc. etc.
  15. 15. GOAL OF CoQ SYSTEM MOST COSTLY LESS COSTLY LEAST COSTLY The customer finds The manufacturer or The company’s quality defect in the delivered service organization system is designed for parts or service finds and corrects the defect prevention and defects internally continuous quality improvement
  16. 16. GOAL OF CoQ SYSTEM Litigation Loss Failure Cost (Rs.) Field Failure Field Repair Ship Point Final Inspection Subsystem/assembly Component Prevention Process
  17. 17. GOAL OF CoQ SYSTEM TO FACILITATE QUALITY EFFORTS THAT WILL LEAD TO OPERATING COST REDUCTION OPPORTUNITIES STRATEGY •Direct attack on Failure Costs to minimize them •Investment in Prevention activities •Reduction in Appraisal Costs
  18. 18. HOW TO START A QUALITY COST PROGRAM?
  19. 19. MANAGEMENT AWARENESS Cost of Quality Concept CoQ Program Objective of Implementation Plan CoQ Program results and improvements existing financial data and the expected from the CoQ program general level of quality costs in the organization
  20. 20. Six Sigma Infrastructure
  21. 21. PROJECT TEAM FINANCE/ACCOUNT QUALITY COORDINATOR INCHARGE Six Sigma BBs / GBs DEPARTMENTAL REPRESENTATIVE
  22. 22. IDENTIFICATION OF QUALITY COST ELEMENTS Prepare a Checklist of Quality Cost elements Identify the Quality Cost elements in each function Review the data available Identify the data to be collected (Xs) Leading Process --> Product --> Lagging (Ys) XZY errors DPU/Yield Temperature Manufacturing Offset Scrap Viscosity Cost of Quality Pressure Rework, RMA
  23. 23. Voice of the Customer Analyze Measure Improve Define Control Institutionalization The DMAIC Model
  24. 24. Compilation of quality cost data REPORTING OF QUALITY COSTS Function-wise quality cost reporting 0.2 0.16 0.15 0.2 0.14 Company-wide quality 0.1 0.12 cost reporting 0.1 0.11 Millions 0.1 0.1 0.1 0.05 0.0 0.0 - Jan 08 Feb 08 Mar 08 Apr 08 May 08 June 08 July 08
  25. 25. JURAN SAID… “All quality improvement occurs on a project-by-project basis and in no other way.”
  26. 26. Thanks Let’s Achieve Excellence

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